Asian stocks fell for a third week, with the regional benchmark index posting its biggest weekly drop since May last year, as the correction in Japanese shares deepened after the yen surged and speculation grew that the US Federal Reserve may scale back stimulus.
Mazda Motor Corp, a Japanese carmaker that gets about 73 percent of revenue from overseas, tumbled 16 percent, leading Japanese exporters lower as a stronger yen crimped their earnings outlook. Samsung Electronics Co, the world’s biggest smartphone maker, sank 7.2 percent after JPMorgan Chase & Co cut profit estimates.
Newcrest Mining Ltd, Australia’s biggest gold producer, slumped 15 percent after saying it will write down the value of its mines after a slump in bullion prices.
The MSCI Asia Pacific Index dropped 3.3 percent this week to 130.37, 9.7 percent below this year’s high on May 20. Japanese stocks extended losses for a third week as Japanese Prime Minister Shinzo Abe’s growth strategy failed to impress investors and as mixed economic data from the US added to concerns that recovery will stall if there is a premature withdrawal of stimulus.
“It’s not that we’ve seen a dramatic shift in the Fed’s exit discussion, but investors are using it as an excuse to sell,” Mizuho Asset Management Co fund manager Masahiko Ejiri said in Tokyo. “Some long positions are being unwound after the market rallied so fast.”
The MSCI Asia Pacific Index is still up 0.8 percent this year after the sell-off in the past three weeks. Shares on the gauge traded at 12.6 times average estimated earnings on Friday, compared with multiples of 15 for the Standard & Poor’s 500 Index and 13 for the STOXX Europe 600 Index, data compiled by Bloomberg show.
Taiwan’s TAIEX fell 1.9 percent this week, ending Friday’s trading down 0.94 points at 8,095.20, compared with 8,254.80 on May 31.
Japan’s TOPIX slumped 6.9 percent this week, the biggest weekly drop since March 18, 2011, while the Nikkei 225 Stock Average declined 6.5 percent. Both gauges have dropped more than 17 percent from their recent high on May 22, close to the 20 percent threshold that some investors consider a bear market.
The Japanese Government Pension Investment Fund (GPIF), the world’s biggest manager of retirement savings with ￥112 trillion (US$1.16 trillion) in assets, said after the market closed on Friday that it will reduce its holdings of local bonds and buy shares.
“The GPIF news could be used as a reason to buy shares,” said Takashi Aoki, a Tokyo-based fund manager at Mizuho. “A lot of investors think that stocks have fallen to such a low level that it’s in a situation where buying resumes.”
Australia’s S&P/ASX 200 Index decreased 3.8 percent, while New Zealand’s NZX 50 Index lost 1.6 percent and South Korea’s KOSPI slipped 3.9 percent.
In China, the Shanghai Composite Index dropped 3.9 percent this week as official and private reports on factory activity offered conflicting views of the country’s economy. A report released by HSBC Holdings PLC and Markit Economics on Monday showed a contraction, while the official measure released by Beijing on June 1 indicated expansion.
Hong Kong’s Hang Seng Index sank 3.7 percent, the biggest weekly drop since May last year, after Nomura Holdings Inc cut its rating to underweight from overweight. Equities in the territory, whose currency is pegged to the US dollar, are most vulnerable should the US Federal Reserve start tightening monetary policy, Michael Kurtz, Nomura’s head of global equity, wrote in a note on Thursday.
In other markets on Friday:
Mumbai fell 0.46 percent, or 90.26 points, from Thursday at 19,429.23 points.
Manila closed 1.41 percent higher, adding 92.94 points to 6,701.95.
Wellington fell 0.35 percent, or 15.48 points, to 4,439.86.